Russian stock market daily morning report (May 05, 2015, Tuesday)

The session of FED was not surprising last week; uncertainty regarding the time frames of Fed switching to rates upping still preserves and holds back buyers activity. The problems of Greece – last week Moody’s has once again cut the ratings of Greece – also pressure the market. Determined talks started last week but still introduced no brilliant ideas despite the prime minister of Greece stating hopes earlier that provisional agreements had to be reached by May 3. At the meantime, as announced the prime minister of Greece announced being confident that the first round of talks was over by May 11, by the meeting of the Ministers of finance of EZ meeting and that some matters were solved by than. The major news for the Russian market last week was the reduction of the key rate by 1.5 pps, which was not a surprise, but did cause a slight weakening of ruble. Activity at the exchange market on the threshold of the long weekend was reduced. Friday the energy sector headed the top gainers list: FSK, Russian Grids, RusHydro, along with Moscow Stock Exchange and VTB. Surgutneftegas grew at the back of 2014 IAS report. Aeroflot, Tatneft, PIK and Magnit have underperformed the targets.

This week, activity at the Russian market will remain low; the market dynamics will be defined by the external factors. The global grounds started the week positively. In Europe, optimism has been introduced by the PMI numbers in the eurozone and Germany. American market closed positively on Monday at the back of the orders’ number growth in processing industry. Today the Russian market will be winning back the global positive of yesterday – we might expect mild growth of the Russian indices.


Main events

The net profit of Surgutneftegas for 2014 by IAS grew 3.2x.

IAS net profit of Surgutneftegas grew 3.2x for 2014 FY and formed 884.8 bn RUB. Growth of the net profit has only been provided by re-estimation of the currency investments of the company. Financial results of the company did not surprise the market. We assume that despite high dividend yield, the potential of the further growth of the preferred stock growth of Surgutneftegas is quite limited – in terms of ruble strengthening, the financial results of the company will experience pressure for 2015 and it would cut the dividend yield of the name.

Contributed by Veles Capital